Salary Continuation Plan: How Does It Benefit You?

Have you ever wondered what will happen if you get hurt, injured, or die while working for your company? Employees are given some benefits as compensation by their employers in addition to their normal salaries. But what if you got into an accident while working?

You are lucky if your employer enrolled you in a salary continuation plan.

Here’s what you need to know about salary continuation plans, (Photo: Marca)

What is a salary continuation plan?

A salary continuation plan is a written agreement between an employer and an employee, where the employer lays out a contingency plan if an employee is no longer able to perform duties due to an injury. This means the employee could receive all or a part of their salary. To be valid, the agreement must be signed before the accident occurs.

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What are the benefits of a salary continuation plan?

The biggest benefit of a salary continuation plan is that the employee will have a sense of loyalty since they believe they are being well taken care of. Employees will be able to work with confidence since they are provided contingency plans in case of accidents.

However, the downside of this salary continuation plan is that some employees might abuse the salary continuation plan by refusing to go back to work even if they can since they are being paid in full.

Employee Retirement Income Security Act (ERISA)

The Employee Retirement Income Security Act (ERISA) is a federal law that protects established health and retirement plans in private industries. According to the Department of Labor, salary continuation plans are not protected by the ERISA. Agreements are directly between a firm and its employees and ERISA have nothing to do with its agreements.

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